11 SEPTEMBER: The Government's decision to axe the carbon tax will result in higher costs to the consumer. In a reversal of the raditional "Polluter Pays" principle, we now have the "we pay to be polluted" principle. If the carbon tax is abandoned, Ireland will have to purchase more carbon credits. This bill will fall on the taxpayer. But instead of the tax money being available to the Irish government as carbon tax would be, the payment for carbon credits will leave the country.
Read the reaction in the media.
Furthermore, Irish taxpayers will pay more for not having a carbon tax. Because we will now not be getting the price signals that the carbon tax would have provided, we will continue to invest in fossil fuel dependent systems (transport, housing, industry etc.). Thus our emissions will be higher and we will pay more through our other taxes to buy carbon credits than we would have paid with carbon tax.
In April, the Government announced that even with a carbon tax, Ireland will purchase 3.7 million tonnes of carbon emissions rights per year between 2008 and 2012. The cost for this at the Government's low estimate of €10 a tonne will be €185 million. Carbon could easily be twice or three times that. This bill will now rise substantially.
For the next commitment period after 2012 either rationing or taxation will be required. Other countries have introduced carbon taxation early, bringing in the correct incentive to encourage the shift from fossil fuels. Sweden has had carbon taxation since 1991, Denmark since 1992.
Ireland is already late. This decision will cost Ireland dearly in the long run.
More: David Healy
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